E-commerce training with small-scale entrepreneurs

in developing countries:
some findings.

Nidhi Tandon
[email protected]

July 2002

Note to the reader: the following briefing draws its observations and
conclusions from two main sources. A first-hand source comprises of a
spectrum of e-commerce training workshops run with women entrepreneurs
and women’s business associations in developing and emerging economies.
These training workshops have been designed and organised by Networked
Intelligence for Development, www.networkedintelligence.com. The second
source draws from anecdotal and case analysis of initiatives in developing and
transition economies.

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1. Introduction: SME data and trends

A 1994 survey of small and medium enterprises (SMEs) in APEC economies found
that they account for 90% of all enterprises. Between 1978 and 1996, women-led
enterprises accounted for a quarter of all business start ups in the region. Between
1995 and 1997, women business operators increased by 9% while male business
operators increased by 2.6%. These businesses typically specialise in small farming,
retail, or craft-work sector1.

A number of studies and surveys show that:

?? Women are leading an entrepreneurial wave

?? Women are starting an almost equal number of new businesses as men
?? Globally women own between one-quarter and one-third of businesses in the
formal sector and are likely to play an even greater role in the informal sector
?? Web-based networks of women’s business associations and service portals are
becoming popular
?? In Russia, women business owners are involved in international trade at a higher
rate (19%) than in the US (13%)In Brazil, Mexico and Argentina, 22% to 32% of
women business owners are involved in international trade.

In Tanzania, SMEs and the informal sectors dominate the economy – earning about
35% of GDP in 1999, employing 20% of the population, of which 50% was in the
trade/retail sector. While SMEs are not usually associated with international activity,
they in fact already play an important role – directly producing about 26% of OECD
exports and 35% of Asia’s exports. Evidence in the US show that women-owned firms
involved in exporting are generally more established, have higher sales, more
employees and are on a higher growth part than those not involved in international
trade.

2. ICT realities for the typical micro and SMEs in developing countries

2.1 Informal to formal: crossing the wire

Typically, micro and small enterprises operate in what is loosely defined as the
informal sector, although there is substantial gray area between the formal and informal
sectors. A number of ILO studies of major African cities report figures for urban labour
force engaged in the informal sector ranging from 30% in Abidjan, to 50% in Dakar
and Lagos, 73% in Ouagadougou and 80% in Accra2. Globally, women represent 75%
of workers in the informal sector, which comprises over 55% of the economy in Latin
America, 45-85% in parts of Asia, and close to 80% in African countries.3

1
Women in a Global Economy: challenge and opportunity in the current Asian Economic Crises.
Bangkok: joint effort of the UNFEM and the CIDA South East Asia Gender Equity program
2
Jacques Giri, “Formal and informal small enterprises in the long term future of sub-Saharan
Africa” World Bank LTPS, Background paper
3
Figures from Nancy Taggart, 2002, E-commerce in developing countries: opportunities for
women, Academy for Educational Development. Further information also available from www.weigo.org

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presentation for UNCTAD e-commerce strategies for development
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 A number of women-run businesses operating in the retail markets for example, might
not declare income, but are required to pay regular market stall and other related taxes.
Small businesses often operate in an informal way, which makes important processes
such as tracking spending patterns and source, income sources, and costing, difficult.
Often times, a small business is made up of a number of inter-dependent micro-
enterprises that together form an insurance policy with incomes flowing in and out of
the distinct entities in order to support the whole.

How is the introduction of ICT to this kind of business perceived by the entrepreneur?
Most micro entrepreneurs have no option than to remain in the informal sector and this
influences the kind of ICT they are willing to invest in. Usually it begins and ends with
ownership of a mobile telephone. Almost all the participants in training events in
Tanzania, Lithuania, Cameroon and Mozambique have mobile telephones – reflecting
the dramatic growth of cellular subscribers in these countries. In fact, in sub-Saharan
Africa and central Asia, the numbers of mobile phones exceed line phones – an
indication of the unmet demand for telephony in those regions (see Table I).

Table I: Telephone use

Region Mobile Radios per 1000 Telephone Waiting time

telephones per people mainlines per for telephones
1000 people 1000 people (years)

East Asia/Pacific 179.5 302.3 200.6 1.2

South Asia 7.5 112.7 27.8 1.6

Sub-Saharan
Africa 27.7 201.5 24.4 6.0
Europe/Central 329.5 446.0 323.5 2.0
Asia
LatinAmerica/ 88.7 418.6 241.9 0.5
Caribean
156.7 420.1 202.5 1.4
World

Source: Chapter 7: Information and Communication Technologies, Markets, and Economic Development,
Karen Eggleston, Robert Jansen and Richard Zeckhauser in “The Global Information Technology Report
2001-2002: Readiness for the Networked World. World Economic Forum 2002”.

A larger or more ambitious business, however, whose market may extend beyond the
immediate community, may consider investing in a wider range of ICTs to support
both the communication and computerisation of aspects of its business. Small
pharmaceutical stalls in Burkina Faso, for example, have benefited from using data
software to track and stock their inventory, and by implication, their past and projected
income.

What NID has found is that the typical woman-led enterprise that participates in its e-
commerce training events are pragmatic practices that straddle both the informal and
formal sectors. They pick and choose those elements of the formal sector that will
enable the business entity to maintain the optics of accountability and transparency,

and from Simel Esim, See How They Grow: Business Development Services for Women’s Business
Growth

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 critical for business auditing and export-trading purposes. But also maintain a
“shadow” business that keeps some of the income “safe” from declaration.4 By
implication, the application of ICTs to MSEs might push the business entities from the
informal to the formal economies, and while this may be desirable from a national
economy perspective, it might not be considered desirable from an individual
entrepreneurs’ perspective.

How does this manifest itself? A micro or small business can approach financial
intermediaries for small low-interest loans based on real collateral value or business
track income. Members of the Uganda Women’s Finance Trust for instance, use loan-
tracking software which is diffused nationally through local post offices for lenders to
track their repayments. This part of the lender’s business is clearly “formalised” and
financially documented but does not mean that all the other elements of the business
that are similarly documented or accessible.

2.2 Implications of management and income structures

While it is difficult to generalise, there is growing evidence that women structure their
enterprises differently to men, establishing flatter management structures, using
consensus building approaches to decisions and valuing performance results
differently. We have also found that often times, women are de facto social
entrepreneurs – obliged to run lean profitable businesses in order to finance the social
support services that they deliver.5

In most APEC economies, women’s income is substantial to each household. On

average their income represents half of the household income. Women are often heads
of household – in Korea, 18% of female workers are principal breadwinners. Three
years ago as a percentage of the male rate, the female economic activity rate ranged
from 93.9% in Vietnam to 43% in Peru, the average for all APEC economies was 70%.

At the same time, other factors indirectly related to management, show that women
tend to have less time to devote to their businesses than men, and are usually forced to
strike a balance between family household and child care. Women also tend to be
more reticent to take the time to seek counseling and advice often because these
services do not target women-owned SMEs, are provided in “male” oriented settings,
and are not adapted to the specific constraints faced by women. Women entrepreneurs,
it follows, tend to take an extremely pragmatic approach to time-saving technological
tools.6 In many of our training events, we have created the space to foster dialogue
between women entrepreneurs and representatives from financial intermediary
services, internet service providers, local government and IT policy makers. Our most
recent training event in Tanzania brought together 30 women entrepreneurs and senior
staff of the National Micro-credit Bank (NMB) who recently launched a 2.5% micro-
loan program for micro and small enterprises which participants were unaware of.

4
Nidhi Tandon, Networked Intelligence for Development, training experiences 1999 to 2002. NID
is a training consultancy based in Canada www.networkedintelligence.com
5
I would estimate that 80% of the businesswomen we work with are involved in social outreach
beyond immediate family care, contributing to orphan programs, working through local church and
institutions, mentoring young women in their communities.
6
Women Entrepreneurs in Small and Medium Enterprises OECD 1999

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2.3 Cost implications for the micro and small enterprise

The poor in Chile spend more on telecommunications than on water. The average
Chilean spends more of their income on telecommunications than on water and energy
combined. A reflection of the perceived opportunities associated with acquiring ICTs7
. Latest trends show a consumer preference for pre-paid cellular phones, more than
half of all cellular telephone clients are in pre-paid mode which do not require strong
credit records and where expenditure can be controlled in detail. In several poor
countries where payphones are scarce, some ingenious micro businesses have made it
their business to provide ambulant payphones in the form of cellular phones charging a
modest markup (as in Bangladesh). In Peru, these micro-entrepreneurs make
themselves more visible in public places by wearing brightly coloured headware and
clothing and have become known as “cholos celulares” (“cellular indians”) 8

In our training experience, it has been clear that women entrepreneurs are prepared to
pay a fee for training on e-commerce – ranging from US$10.00 to US$20.00 per
participant – a measure of the need and desire for information and know-how. Small
enterprises who understand the importance of business applications often face
difficulties in making informed choices on simple business software, and often times
resort to investing in pirate software that is substantially cheaper than off-the-shelf
packages.

As costs of connectivity continue to drop – the obstacles women face are typically less
to do with hefty hardware or connectivity costs and more to do purchasing and
applying the most appropriate kinds of software applications and with functioning in a
policy environment that influences their access, use and opportunities. The combined
impact of low quality, high cost enterprise support services, and government policies
that slow down business processes, work against the typical SME.

2.4 Government policy implications for the SME

In the African countries that we have worked in, policy interventions and regulations
around ICT diffusion and e-commerce support are still in the making and in most cases
not enforceable. At times this has been to the interests of SMEs who have taken
advantage of the policy vacuum to push through business objectives.

The regulatory hurdles that one women’s business association had to contend with
were less due to existing regulations and more a result of a vacuum in Internet
Governance at the national level. Internet governance is not about the control of the
Internet and its content, but of much narrower issues such as management,
administration of Internet names, numbers, licensing, frequencies, bandwidth and
standards. Government intervention usually takes three forms:
?? Control of entry to the market by suppliers;
?? Access of suppliers to certain resources (e.g. spectrum, licenses)
?? Control of operation (e.g. technical standards, service quality)

7
Telecommunications and the Poor: Jose Ricardo Melo. Paper presented at Infrastructure for
Development: Private Solutions and the Poor June 2000
8
Telecommunications and the Poor: Jose Ricardo Melo. Paper presented at Infrastructure for
Development: Private Solutions and the Poor June 2000

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 From all accounts, it is reasonable to conclude that current government procedures are
inadequate to handle the rapid pace of change, the globalization of the Internet, its
commercialization and the growth in user-driven demands. This vacuum is made even
more acute by the clash between a top-down formal government-driven telecom
structure and a bottom-up informal industry-driven Internet. To date, the
transformation processes in the telecommunications sector’s regulation has been driven
by economic efficiency factors and not by equity factors.9 This has had an immediate
impact on the one service most sought after by micro and SMEs – which is local
telephone costs.

Internet telephony, or VOIP, can drive long distance communication costs down
dramatically and quickly. Most governments are however, wary of the implications of
the significant threat to long distance and international service revenue. Much intra-
African traffic is currently routed via Europe, but as VOIP becomes more widely
available, pressure will mount for cheaper services.

Policy support for an e-commerce environment has to develop hand in hand with
national programs, social investment and domestic banking systems that specifically
cater to SME needs. The E-commerce readiness assessment guide put forward by the
APEC Readiness Initiative 2000 : a partnership of the Business Community with
APEC economies is one of the few guides that asks, under promotion and facilitation
activities, is your economy taking initiatives to raise awareness and disseminate best e-
commerce practice among SMEs? The European Union’s e-commerce strategy
focuses on the opportunities presented by diffusion of e-commerce amongst SMEs.

“The evidence is strong that the greatest gains from e-commerce come when it diffuses
throughout the economy, not when it remains closeted in a park or zone. Thus the
approach of Sri Lanka, or Thailand, where business incubator operations are combined
with multifaceted education and training programmes has greater potential for domestic
diffusion than a model in which only firms are located together.” 10

3. The potential impact of information technology on SME competitiveness

While these are early days yet, IT and management information systems are
introducing systemic changes to the ways in which small firms do business. IT
increasingly plays a role in all aspects of competitiveness: products, production
techniques, management methods, firm organisation, staff training, market information.
The converging ICTs compensate for size and distance and enable companies to grow
and to “go global”. Electronic conferencing, the Internet, electronic commerce,
electronic networking and “home” working via Internet are some of the key
technological innovations for women entrepreneurs’ competitiveness that allows them
to create and continue to develop their businesses. Internet is increasingly used as a
key tool for access to information on quality norms, legal and regulatory requirements,
fiscal regulations and opportunities, and as a learning tool for best practices and as an
address contact book.

9
Telecommunications and the Poor: Jose Ricardo Melo. Paper presented at Infrastructure for
Development: Private Solutions and the Poor June 2000
10
Catherine Mann: Networked Readiness and Trade Exposure: in The Global Information
Technology Report 2001-2002: Readiness for the Networked World. World Economic Forum 2002.

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 The networking element of ICTs, apart from anything else, is one immediate and clear
opportunity. Les Femmes Chefs d’Entreprises Mondiales (FCEM) has a homepage and
it’s members in 33 countries produce web-based information linked to the FCEM
homepage. This has permitted them to be interactive; they boast a marketing list of
around 45,000 members. One example that I especially like is to watch what the small
business members of the North York Chamber of Commerce in Toronto, Ontario do to
network with and support each other. They have an information website, which,
amongst other things, enables members to print out discount coupons for each others’
services, an immediate benefit of being a Chambers member.

In the US, Acenet is an electronic network for investors to find women-owned firms in
which they would like to invest, while Pronet allows women-owned firms to input data
about their firms in order to procure government contracts.

Arguably, SMEs can boast a flexibility that large firms might not be able to which
would give them a natural advantage to adjusting to market evolution. However,
market access remains problematic in a competitive environment that does not always
work to their advantage.

4. Experiences with training women entrepreneurs

Given all the above, it stands to reason that women and businesswomen are curious to
find out how the digital economy might affect them. While the training contexts have
been quite different from each other, women owners and managers of SMEs have
shown the same needs and interests in understanding and integrating ICTs into their
activities. These are summarised in Table II.

Networked Intelligence for Development has developed training programs that strike a
balance between methodology and content, since the first informs the second. We
usually begin by conducting a needs assessment that asks women what it is they want
to know. Their responses are usually over-simplistic and focus on access issues of
ICT. We then supplement their initial questions by:

a) finding out and analyzing what they need to know as SMEs in their national
contexts;
b) providing the physical and intellectual space for dialogue that will enable
enterprising participants to form alliances with ISPs, business support services,
financial intermediaries and other businesses;
c) providing on-line “laboratory” conditions for participants to experiment with and
experience web navigation and software packages.

Summary reviews of women-specific ICT training content show the following

tendencies:

Too often the training emphasis is placed on an “output” objective and are disappointed
when there is no immediate output. The first objectives behind ICT training for
women need to focus on breaking myths and pre-conceptions about the new
technologies – this is an “outcome” objective. ‘Results-oriented’ donor criteria often
discourage sponsorship of ICT training for this reason.
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 Content is too simplistic, too academic or generic. The nature of ICTs lends itself to
“problem-based learning”. Women are unlikely to invest the time required to explore
ICTs on their own, but are more inclined to ask questions and to determine their
training priority needs in an applied group dynamics workshop once they understand
what computerisation and connectivity can mean for their businesses.

Training often overlooks or underestimates the uses for today’s software – users still
have not grasped the full implications of virtual networks, user support groups, free
ware, share ware, and basic computerization software. Diffusion of, and making these
basic tools free and user-friendly is a first step to taking businesswomen across the
threshold to full ICT use. Once introduced, these kinds of applications find their
natural homes in different MSE contexts.

There is a fine balance between methodology and content, the first informs the last.
While women should be asked to identify their training needs, this has to be
supplemented by finding out about their national contexts and what they need to know.

There is a gradual but growing trend towards investing in ICT training for small—scale
businesswomen11 with new ‘sponsors’ joining the small rank of agencies that support
MSE development – such as the Inter American Development Bank’s recent training
initiatives for women in Costa Rica and Bolivia.

11
Training programs for women are also extending in other sectors that encourage women’s
employment, such as CISCO’s gender networking program and the Call Centre Academy training for
women in the Phillipines, but this is not the study focus

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Table II: Dimensions of ICT training needs 2002 – micro and SMEs matrix

Entrepeneur
interests / Infrastructure Interventions and
ICT and access services Informatics and applications
dimension

Micro Cellular phone, Access to micro- Usually interested in getting an email account set
business sometimes an credit scheme, up.
email account. potential client for
mobile (phone-based) Wants to understand the Web, the functions of
financial services. search engines, how to find information and
navigate the web.

Introduction to concepts of “strategic alliances” and

B2B business models.

How to access information on government

programs, credit schemes, market prices.

Small Cellular phone, Some financial Wants to understand listserves, group discussions,
enterprise E-mail account intermediary services user support groups and virtual networks.
access at public - may be delivered
or other cyber with ICTs or using Interested to begin applying simple accounting
centre. traditional means. software and curious about other SME specific
May have graduated software applications. Looking for on-line courses.
from micro credit
schemes. Wants to understand how software can be
downloaded off the Net.
Marketing through
trade shows. Curious about other web sites that market products
or services, digitization of images and an
Usually a member of understanding of secure payment transactions over
a business support the Web.
organisation.
Keen to compare business models with like-sized
Interested in ICT businesses.
policy and likely
impact on business. Beginning to understand the business opportunities
of actually providing telecom services to other
businesses.

Medium Cellular phone Usually a member of Looking at different operating systems, curious
enterprise Personal local chambers of about Linux and ASPs.
computer commerce or
Dial up business association. Beginning to computerise some basic business
connection processes, payroll, accounts. A few beginning to
Is usually a B2B link information systems within the business.
networker even if Interested to compare and use CD Rom business
ICTs are not applied tools.
in the networking.
Most are keen to set up a business entity website
and build virtual company profile.

Source: Networked Intelligence for Development, 2002

5. Conclusion

“There is great optimism over the potential for ICTs to

promote economic development and alleviate poverty.
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 Currently, however, there is neither a solid theoretical basis
nor convincing empirical evidence to support such
optimism” 12

“Support of entrepreneurship, especially local-based

programs to develop social capital and to incubate and
mentor new entrepreneur are critical. We need to expand our
efforts to help existing businesses better utilize IT. This new
phase of the information revolution will be marked by the
transformation of small and medium size businesses.13

The reality of SME approaches to adopting and integrating ICTs into the business and
marketing functions lies somewhere between these two quotes. Our training
experiences with women entrepreneurs to date confirms our optimism about the
potentials and opportunities presented by ICTs to micro, small and medium
enterprises.
_______________________________________

Sources and background reading

World Telecommunication Development Report 1998

Mainstreaming gender in World Bank lending: an update
www.worldbank.org/html/oed/16409.htm

The Global Information Technology Report 2001-2002: Readiness for the Networked World.
World Economic Forum 2002.

APEC Readiness Initiative 2000 : a partnership of the Business Community with APEC
economies. E-commerce readiness assessment guide. www.ecommerce.gov/apec

12 The Global Information Technology Report 2001-2002: Readiness for the Networked World.
World Economic Forum 2002.
13
Adam Thierer, Director, Telecommunication Studies, CATO Institute, Washington DC.

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